A lot of business owners find their business growing every year but the list of responsibilities just keeps growing and their paycheck often doesn’t grow along with them. This is a problem we’ve been helping our customers fix for the last 3 years so we’ll teach you the 4 biggest levers to increase your take home pay while also reducing the amount of time you have to pour in.
The first one is your gross profit margins. Most people do not put enough importance into this number. It is severely neglected in most cases and chances are you put more effort into improving a different number in your business than you do this one. However, this one is the strongest lever you have in not only increasing your take home pay as the owner but also just growing your business.
Here is why: small changes in gross profits can make a massive difference in your net profits. If you sell $10k in sandwiches at 40% gross profit margins with set monthly expenses of $2,900 you net $1,100 at the end of the month. But by increasing your margin to 60% and now making $15k instead, you net $6,100 which is a massive increase from that original $1,100. In this example we went from an 11% net margin to a 40.6% net margin that is a 3.69x increase to our margin but a 5.45x increase to the absolute amount. All of this while selling the same amount of sandwiches. So to get more money out at a disproportionate amount, just focus on getting more profits on the front end.
Next up is increasing your customers’ value. Your current customers are the easiest and cheapest people for you to sell to. So figure out what you can do to make them more valuable. This could be to sell them more frequently, selling them more stuff upfront, or doing both. You want to maximize the outcomes from the efforts you currently put into getting new customers in, and if you do so, not only does business get a lot easier, you end up making a lot more money. (And your business will also be more valuable to potential buyers.)
The third lever on the list is really simple, and that is keeping your business as simple as possible. The simpler you can make your business the easier it is to grow and the less things will break (because there’s less that can even break). Don’t overcomplicate things, focus on selling as many people as possible at the highest margin as possible. That’s basically all you need to do in business, so find the easiest path to doing that.
Finally and by having the third step in place this one becomes much easier and that is hiring people to do the stuff for you. Ultimately the best way to make more money is to do more of what currently makes you that money. And without other people that becomes really hard. So don’t be afraid to bring new people on and expand the business if you aren’t making as much as you currently want. Just make sure you that before you try to scale you’ve already nailed the previous three as those are way easier ways to make more money from your business.
Always so helpful! Very responsive. Super professional. Great information and advice for growth!!!